1. Rental properties are most of the time full, as many other areas you could struggle to find renters
2. Santa Monica does have rent control, but it is specific to each building, however I would steer clear of properties that have had a long term tenant such as 20 years because this rent may be significantly smaller
3. Desirability-everyone wants to live in Santa Monica with the Beach, Great Shopping, and Restaurants
Give me a call and we can discuss more of your options on purchasing investment rental property in Santa Monica, I know the area extensively as I both live and work here.
Have a great day,
Heather Paul, Realtor
Let me know if there is anything that I can assist you with.
Santa Monica offers a lot in the value of a rental property, ie: being next to the ocean, local shops, restaurants, night life, schools, transportation, etc. However, one thing that you need to be aware of is that many of the apartment buildings that were converted to condos under the TORCA rules, may still have an older tenant that resided in the unit when the conversion took place. These tenants are "Grandfathered" under the Santa Monica Rent Control Guidelines, which means, that they can not be evicted for owner occupancy and several other reasons and their rents will be low. Ex: a 3 bedroom 2 bath condo, 4 blocks from the ocean, occupied by the same tenant for 27 years, and was the tenant during the TORCA conversion, only pays $1288 per month. This rent amount is regulated by the Rent Control Board with yearly increases. You can not just raise the rent to the current market value. If you wanted to move into this unit, relocation fees would need to be agreed to and paid to the tenant to vacate the unit, and this can be rather costly.
So when looking in Santa Monica, seek a vacant condo unit for purchase or other types of properties, such as a multi-unit apartment building or a single family home.
The City of Los Angeles does not have this type of program. However, rental units in the City of Los Angeles that were built prior to 1978 are covered under the LA Rent Stabilization Ordinance. Anything built after 1978 is not. Many areas in the San Fernando Valley are included in City of Los Angeles. Rule of thumb, if LAPD and the LAFD respond to emergencies at a location, it's the City of Los Angeles. If the Sheriff Department or other entities respond, (with the exception of West Hollywood, which is under WEHO Rent Control), more than likely is not the City of Los Angeles and not under rent control.
Non incorporated areas of Los Angeles County, ie: Glendale, Marina Del Rey, Burbank, Beverly Hills, Culver City, Inglewood, the South Bay (with few exceptions) do not have Rent Control.
Feel free to contact me if you would like more information.
All the best,
Kat Becker, Estate Agent
Prudential California Realty
Many property owners who are under rent control, are quite displeased about it. With the rate of inflation and constantly increasing costs it's difficult to show a possitive cash flow with such property. Most people do not go into an investment to lose money.
If you buy in other areas you may have more freedom of expression and less cooks in the kitchen... BTW, West Hollywood and Beverly Hills are comparable with the rent control...
Probably I would not recommend it if you are a first time real estate investor. It requires a level of experience.
This all depends upon what the rental restrictions are and the nature of your personal rental goals. Are you considering annual or seasonal rentals?
Rental restrictions that limit the number of times and the duration of each rental can create limits that get in the way for some rental opportunities. These infringements many times have a greater impact on the seasonal rental arrangement than the annual program.
Whether or not it's a solid move may depend on your overall plans and expectations.